Did you see ??

on breakfast tv this morning.Ex pats moaning about the exchange rate hitting pensions and the increased cost of living in Spain etc.They seem to have the blinkers on because the cost of living for pensioners is even higher in the UK and whats more it is cold and grey and wet.

They can't tax the sun and I for one would rather be poor in the sun than here in the cold.

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If you're going through hell keep on going, you might get out before the devil even knows you're there.

I am afraid you will always get this,yes the exchange rate has effected the pensions over here and the cost of living has risen as it always does anywhere.

The trouble is you get used to a standard of living and after a while what used to a refreshing change becomes reality...

You can tell you are used to the prices here when you stop asking yourself and each other "how much is that in pounds?" everytime you are out shopping or in a restaurant.

Of course the other answer is us Brits always like a good moan......i think a lot of people forget that its the mess of the UK economy that has caused the rate to drop,its not spain's fault that the pension doesn't go as far..

We have been out here for two years, getting by on three very small company pensions and managing reasonably well.

But those pensions are all paid in sterling and the initial exchange rate of 1.6 euros to the pound has fallen to around 1.2 and that equates to a 25% loss of income.

In September I got my first UK State pension payment which is also paid in sterling obviously.

The fact of the matter is however that the receipt of this state pension only just offsets the losses incurred by the fall in the exchange rate and so in fact despite an extra 770 Euros coming in each month we are no better off than we were when we first came here.

It's not so much the moaning but it is causing quite a problem. Moving over when the exchange rate was good, around 1.60, you could probably say this might fall to 1.40 or even 1.30 and still be good. However, was quoted 1.12 at the Post Office today which, if you are relying on a UK pension, means even the best plans go awry. In my case, I have a mortgage in Spain of just under 800 euros a month. I send over 800 pounds and was counting on the extra to pay my bills. At 1.30 that meant I was getting an "extra" 240 euros a month to cover bills. When it dropped to 1.25 then still had the extra 200 euros. Now, only 96 euros a month on top and, if it goes to 1 for 1, I will have to send extra over.

Plus, going round the supermarkets and filling the trolley for a couple of weeks at 100 euros was great when that was only £60. Gosh, how cheap it is here, we thought, If that goes to £100 it won't be so cheap.

Anyhoo. Spain is also in trouble with the credit crunch and inflation. They can't do anything about it, like lowering interest rates etc, because it is all dictated by the ECB. There is lots of speculation around that Spain might actually withdraw from the euro. It would take a brave nation to do this unilaterally but, as the Southern European countries (notably Spain, Italy and Greece) are most affected, there may be a case for all three countries withdrawing. The Northern nations haven't been hit so hard so can weather the storm better but it is not doing the economies of the Southern countries any good at all. If you think this is pie in the sky, have a Google for this subject and there are several well-informed experts speculating on this. Indeed, it has been reported that people in Germany are refusing to accept euro notes from the banks unless they have been issued in Germany and are not taking other countries issued banknotes. Strange that, for one currency, there can be a lack of confidence in some parts of it.

This one comment from a betting site:

The economy around the world is so bad that the folks from Paddy Power have begun offering bets on the meltdown. Gambling911.com, which welcomes Paddy Power to its family of fine sponsors, will now regularly feature bets offered by Ireland's largest bookmaker, and the UK's third biggest bookmaker.

One of the bets currently being featured at Paddy Power - The first country to pull out of the Euro by December 31, 2009 (that's just over 12 months from now but it could happen tomorrow for all we know).

The favorites - Italy and Ireland at 7/4 and 3/1 odds, respectively. Spain had odds of 7/2.

In a punishing day for currencies Friday, investors pummeled the Australian and Canadian dollars and sought the U.S. dollar as a haven, the Wall Street Journal reported.

There was also an article in the Daily Telegraph speculating on these countries withdrawing. Also this one from the Monte Carlo report:

There are plenty of others discussing the same theme. Not my opinion but it does make you think. Maybe the fact that my bank statements still come with the peseta equivalent is a pointer to the low confidence in the system. Could it happen?

1. Germany announced it was officially in recession. As the largest exporter in the world, Germany is also feeling the crunch as people aren't buying their goods anymore. I think I have a few deutschemarks hanging around, best I keep hold of them.

2. Mervyn King, governor of the Bank of England, gave a press conference to say how strong the pound was and that the decision to lower interest rates should not have impacted on the exchange rate. As he was explaining the bank's policy on setting exchange rates and mentioning how the world had changed, the pound went from €1.19 to €1.16 and from $1.53 to $1.47. Pretty good at instilling confidence, isn't he?

Next weeks announcement on interest rates by the European Central Bank may see a drastic lowering of interest rates due to the crisis now afflicting the powerful nations like Germany. You may see the pound recover against the euro then but will it be too late? After being used to seeing a cent or two up or down in a week, it has come as a bit of a shock to see it losing ground every single day.

Will be in Spain tomorrow morning. As mentioned before, will have my hat on the pavement with the sign "Veterano de las Malvinas - Pobrecito" so please chuck the odd euro or two in the hat for me. Sterling not accepted but will be grateful for pesetas. Muchas Gracias, gente.

If I was a cynic or a conspiracy theorist I could almost envisage a situation where Mervyn, Gordon and their cronies hatched a plot to stop UK pensioners and wage earners from escaping the UK by making it impossible to buy property over here by fixing the strength of the Pound.

Tony Blair and Gordon Brown once announced that if the rate ever sank to 1.3 he would consider the time was right to take Britain into the Euro...

Well its been below that figure for over a year now and no sign of any move to change. Personally I dont think Brown will ever give up Sterling.

In an extention to my earlier post, one of the pensions I referred to; last month it brought me 537 Euros; this month its down to 526; 11 Euros in a month not much but when taken over a year it adds up to a lot of money; like a full weeks shopping...when coupled with the rate of inflation in Spain it becomes a serious problem...

Another strange thing about the fluctuations is that if the rate does improve it always happens when none of the pension payments are due and always seems to fall to its lowest value at the end / beginning of the month...

Of course though I'm not a cynic so its just coincidence...isn't it....?

I think you could only get E1.19 to the pound yesterday.. I wonder at what exchange would they consider adopting the euro in UK? Unfortunately for me this all coincides at a time when I have to make a substantial transfer to cover mortgage and IBI payments.

For people living in Spain relying on UK pension returns to live off. Even though the exchange rates have devalued the income received, for people living in the UK the cost of living has gone up that much this year that they are equally as bad off if not worse. I totally agree that I would rather be worse off living in the sun than in the UK.

Incidently we went to a Morrisons supermarket in the UK and I noticed that the trolleys would take Euros as well as Pounds, on hearing me mention this to my better half, the trolley attendent said yes the goverment is waiting for the exchange rate to go 1 for 1 and then the UK will ditch the pound. Does Morrisons know something we dont I wonder.

I have been predicting for a long time that Gordon would wait until the Pound and Euro were at parity before he took us into the Eurozone. However, I now think it increasingly unlikely that the Eurozone would want us or our basket case economy pulling the value of the Euro down even further. Gordon Brown can now do what he likes and take whatever gambles he wants with our money. He stands about a 1% chance of pulling off some sort of a miracle and a 99% likelihood of making things far worse, but as he becomes ever more desparate what does it matter to him? If the 1% pays off he will be a hero and will likely be returned as PM, if not? Well he has nothing to loose, he will have a multi-million pound pension pot, inflation proofed from what remains of our national wealth and will retire to the sun to write books on Brownsian Economics, making him further millions whilst we suffer from his "thrift" for the remainder of our lives. Like his predecessor, he has made the UK his private fiefdom for as long as he can manage to hold on to it and his cowardly MP's stand by in dumb horror. Then, off in his private lifeboat to the adulation of the world, lauging at the culpability of the British public.

I consider really lucky , I get 90% of my income paid in dollars and the exchange rate is going the opposite way thanthe £ when i first moved here from the UK 4 years ago $1 would get me about 62cents .. now it's around 77c